In December 2015, Congress passed Fixing America’s Surface Transportation Act (or FAST Act). This law requires the IRS to use private collection agencies to collect outstanding inactive tax payments. The four collection agencies under contract with the IRS are CBE Group, Conserve, Performant, and Pioneer. In April 2017, taxpayers began receiving correspondence and calls from these contractors. Following is some information taxpayers should know about this collection process.
- The IRS will mail taxpayers several collection notices before referring any accounts to a private debt collector. The debt collector will send a second, separate letter to the taxpayer confirming this transfer. These companies must clearly identify themselves as working for the IRS in all communications.
- Only certain types of accounts are being referred to debt collection agencies. Generally, older, delinquent accounts are being referred. Accounts involving certain types of taxpayers—such as minors, those in combat zones, victims of tax-related identity theft, accounts subject to installment agreements, or accounts classified as an innocent spouse cases—will not be referred.
- Taxpayers retain their consumer protections. These collection agencies must follow provisions of the Fair Debt Collection Practices Act (FDCPA), the federal law that prohibits deceptive or abusive behavior by private debt collectors. This is a notable exception to the general rule that the FDCPA does not apply to government debts, as they are often not considered consumer debts. Some of the prohibited conduct included under the FDCPA includes:
See Debt Collection (from the Federal Trade Commission) for more information on the FDCPA.
- Contacting taxpayers by telephone outside of the hours of 8 a.m. to 9 p.m. local time with intent to annoy, abuse, or harass any person at the called number.
- Misrepresenting the debt, including using deception to collect the debt (for example, the debt collector’s misrepresentation that he or she is a law enforcement officer).
- Threatening arrest or legal action
- Using abusive language or profanity.
- There are other options for low-income taxpayers. For example, taxpayers can have outstanding tax accounts categorized as “Currently Not Collectible,” whereby IRS collection efforts are stopped due to economic hardship. Private debt collectors may not advise the taxpayers of these options, and low-income taxpayers may enter into unsustainable repayment agreements, or forego other life necessities in order to pay the IRS. See Currently Not Collectible (from Taxpayer Advocate Service) for more information,
- There may be an increase in tax-related fraud. Taxpayer advocates and consumer groups warn that this arrangement will make it easier for scammers who extort money by pretending to be the IRS. Indications that the call may be a scam include calls that:
- Are very aggressive or threaten you with arrest
- Try to pressure you to make immediate payment
- Ask for your credit or debit card information
- Request payment via gift cards, including Amazon and iTunes, prepaid debit cards, or a wire transfer.
- Taxpayers may lodge a complaint or report misconduct by private debt collectors by calling the TIGTA hotline at 1-800-366-4484, visiting www.tigta.gov, or writing to:
Treasury Inspector General for Tax Administration
Post Office Box 589
Ben Franklin Station
Washington, DC 20044-0589
You may also contact Legal Services of New Jersey’s Tax Legal Assistance Project at 1-888-LSNJ-LAW for any questions or assistance relating to this or any other federal tax problems.
This information last reviewed: Jan 8, 2018